Transcript: President Barack Obama on the debt ceiling
Edited by Jenny Jiang
Transcript of President Barack Obama’s remarks on the debt ceiling. Excerpts from the White House press conference on Jan. 14, 2013:
Now, the other congressionally imposed deadline coming up is the so-called debt ceiling — something most Americans hadn’t even heard of before two years ago. I want to be clear about this. The debt ceiling is not a question of authorizing more spending. Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. These are bills that have already been racked up and we need to pay them.
So while I’m willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up.
If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn’t get their paychecks. Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire. Interest rates would spike for anybody who borrows money — every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession, and ironically, would probably increase our deficit.
So to even entertain the idea of this happening — of the United States of America not paying its bills — is irresponsible. It’s absurd. As the Speaker said two years ago, it would be — and I’m quoting Speaker Boehner now — “a financial disaster, not only for us, but for the worldwide economy.”
So we’ve got to pay our bills. And Republicans in Congress have two choices here: They can act responsibly, and pay America’s bills; or they can act irresponsibly, and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.
And they better choose quickly, because time is running short. The last time Republicans in Congress even flirted with this idea, our AAA credit rating was downgraded for the first time in our history; our businesses created the fewest jobs of any month in nearly the past three years; and, ironically, the whole fiasco actually added to the deficit.
So it shouldn’t be surprising, given all this talk, that the American people think Washington is hurting, rather than helping, the country at the moment. They see their representatives consumed with partisan brinksmanship over paying our bills, while they overwhelmingly want us to focus on growing the economy and creating more jobs.
So let’s finish this debate. Let’s give our businesses and the world the certainty that our economy and our reputation are still second to none. We pay our bills. We handle our business. And then we can move on — because America has a lot to do. We’ve got to create more jobs. We’ve got to boost the wages of those who have work. We’ve got to reach for energy independence. We’ve got to reform our immigration system. We’ve got to give our children the best education possible, and we’ve got to do everything we can to protect them from the horrors of gun violence.
Q Thank you, sir. As you know, the Senate Democrats, Harry Reid sent you a letter begging you, essentially, to take — consider some sort of executive action on this debt ceiling issue. I know you’ve said you’re not negotiating on it. Your administration has ruled out the various ideas that have been out there — the 14th Amendment. But just this morning, one of the House Democratic leaders, Jim Clyburn, asked you to use the 14th Amendment and even said, sometimes that’s what it takes. He brought up the Emancipation Proclamation as saying it took executive action when Congress wouldn’t act, and he compared the debt ceiling to that. So are you considering a plan B, and if not, why not?
THE PRESIDENT: Well, Chuck, the issue here is whether or not America pays its bills. We are not a deadbeat nation. And so there’s a very simple solution to this: Congress authorizes us to pay our bills.
Now, if the House and the Senate want to give me the authority so that they don’t have to take these tough votes, if they want to put the responsibility on me to raise the debt ceiling, I’m happy to take it. Mitch McConnell, the Republican Leader in the Senate, had a proposal like that last year, and I’m happy to accept it. But if they want to keep this responsibility, then they need to go ahead and get it done.
And there are no magic tricks here. There are no loopholes. There are no easy outs. This is a matter of Congress authorizes spending. They order me to spend. They tell me, you need to fund our Defense Department at such and such a level; you need to send out Social Security checks; you need to make sure that you are paying to care for our veterans. They lay all this out for me because they have the spending power. And so I am required by law to go ahead and pay these bills.
Separately, they also have to authorize the raising of the debt ceiling in order to make sure that those bills are paid. And so, what Congress can’t do is tell me to spend X, and then say, but we’re not going to give you the authority to go ahead and pay the bills.
And I just want to repeat — because I think sometimes the American people, understandably, aren’t following all the debates here in Washington — raising the debt ceiling does not authorize us to spend more. All it does is say that America will pay its bills. And we are not a dead-beat nation. And the consequences of us not paying our bills, as I outlined in my opening statement, would be disastrous.
So I understand the impulse to try to get around this in a simple way. But there’s one way to get around this. There’s one way to deal with it. And that is for Congress to authorize me to pay for those items of spending that they have already authorized.
And the notion that Republicans in the House, or maybe some Republicans in the Senate, would suggest that “in order for us to get our way on our spending priorities, that we would risk the full faith and credit of the United States” — that I think is not what the Founders intended. That’s not how I think most Americans think our democracy should work. They’ve got a point of view; Democrats in Congress have a point of view. They need to sit down and work out a compromise.
Q You just outlined an entire rationale for why this can’t happen.
THE PRESIDENT: Yes.
Q And if — then if — and you’re not negotiating on the debt ceiling.
THE PRESIDENT: Yes.
Q So you’re not negotiating and they say you have to negotiate, and you’re not considering another plan B, then do you just wait it out and we do go — we do see all these things happen?
THE PRESIDENT: Well look, Chuck, there are — there’s a pretty straightforward way of doing this and that is to set the debt ceiling aside, we pay our bills, and then we have a vigorous debate about how we’re going to do further deficit reduction in a balanced way.
Keep in mind that what we’ve heard from some Republicans in both the House and the Senate is that they will only increase the debt ceiling by the amount of spending cuts that they’re able to push through and — in order to replace the automatic spending cuts of the sequester — that’s $1.2 trillion. Say it takes another trillion or trillion-two to get us through one more year, they’d have to identify $2.5 trillion in cuts just to get the debt ceiling extended to next year — $2.5 trillion.
They can’t even — Congress has not been able to identify $1.2 trillion in cuts that they’re happy with. Because these same Republicans say they don’t want to cut defense; they’ve claimed that they don’t want to gut Medicare or harm the vulnerable. But the truth of the matter is that you can’t meet their own criteria without drastically cutting Medicare, or having an impact on Medicaid, or affecting our defense spending. So the math just doesn’t add up.
Now, here’s what would work. What would work would be for us to say we’ve already done close to $2 trillion in deficit reduction, and if you add the interest that we won’t be paying because of less spending and increased revenue, it adds up to about $2.5 trillion. The consensus is we need about $4 trillion to stabilize our debt and our deficit, which means we need about $1.5 trillion more. The package that I offered to Speaker Boehner before we — before the New Year would achieve that. We were actually fairly close in terms of arriving at that number.
So if the goal is to make sure that we are being responsible about our debt and our deficit, if that’s the conversation we’re having, I’m happy to have that conversation. And by closing some additional loopholes through tax reform — which Speaker Boehner has acknowledged can raise money in a sensible way — and by doing some additional cuts, including making sure that we are reducing our health care spending, which is the main driver of our deficits, we can arrive at a package that gets this thing done.
I’m happy to have that conversation. What I will not do is to have that negotiation with a gun at the head of the American people — the threat that “unless we get our way, unless you gut Medicare or Medicaid, or otherwise slash things that the American people don’t believe should be slashed, that we’re going to threaten to wreck the entire economy.” That is not how historically this has been done. That’s not how we’re going to do it this time.
Q No plan B? You’re not searching for any other –
THE PRESIDENT: Chuck, what I’m saying to you is that there is no simpler solution, no ready, credible solution, other than Congress either give me the authority to raise the debt ceiling, or exercise the responsibility that they have kept for themselves and raise the debt ceiling. Because this is about paying your bills.
Everybody here understands this. I mean, this is not a complicated concept. You don’t go out to dinner and then eat all you want, and then leave without paying the check. And if you do, you’re breaking the law. And Congress should think about it the same way that the American people do. You don’t — now, if Congress wants to have a debate about maybe we shouldn’t go out to dinner next time, maybe we should go to a more modest restaurant, that’s fine. That’s a debate that we should have. But you don’t say, in order for me to control my appetites, I’m going to not pay the people who already provided me services, people who already lent me the money. That’s not showing any discipline. All that’s doing is not meeting your obligations. You can’t do that.
And that’s not a credible way to run this government. We’ve got to stop lurching from crisis to crisis to crisis, when there’s this clear path ahead of us that simply requires some discipline, some responsibility and some compromise. That’s where we need to go. That’s how this needs to work.
Q Thank you, Mr. President. As you well know, sir, finding votes for the debt ceiling can sometimes be complicated.
You, yourself, as a member of the Senate, voted against a debt ceiling increase. And in previous aspects of American history — President Reagan in 1985, President George Herbert Walker Bush in 1990, President Clinton in 1997 — all signed deficit reduction deals that were contingent upon or in the context of raising the debt ceiling. You, yourself, four times have done that. Three times, those were related to deficit reduction or budget maneuvers.
What Chuck and I and I think many people are curious about is this new, adamant desire on your part not to negotiate, when that seems to conflict with the entire history in the modern era of American Presidents and the debt ceiling, and your own history on the debt ceiling. And doesn’t that suggest that we are going to go into a default situation because no one is talking to each other about how to resolve this?
THE PRESIDENT: Well, no, Major, I think if you look at the history, getting votes for the debt ceiling is always difficult, and budgets in this town are always difficult. I went through this just last year. But what’s different is we never saw a situation as we saw last year in which certain groups in Congress took such an absolutist position that we came within a few days of defaulting. And the fact of the matter is, is that we have never seen the debt ceiling used in this fashion, where the notion was, you know what, we might default unless we get 100 percent of what we want. That hasn’t happened.
Now, as I indicated before, I’m happy to have a conversation about how we reduce our deficits further in a sensible way. Although one thing I want to point out is that the American people are also concerned about how we grow our economy, how we put people back to work, how we make sure that we finance our workers getting properly trained and our schools are giving our kids the education we deserve. There’s a whole growth agenda which will reduce our deficits that’s important as well.
But what you’ve never seen is the notion that has been presented, so far at least, by the Republicans that deficit reduction — we’ll only count spending cuts; that we will raise the deficit — or the debt ceiling dollar for dollar on spending cuts. There are a whole set of rules that have been established that are impossible to meet without doing severe damage to the economy.
And so what we’re not going to do is put ourselves in a position where in order to pay for spending that we’ve already incurred, that our two options are we’re either going to profoundly hurt the economy and hurt middle-class families and hurt seniors and hurt kids who are trying to go to college, or, alternatively, we’re going to blow up the economy. We’re not going to do that.
Q (Inaudible) — open to a one-to-three-month extension to the debt ceiling — whatever Congress sends you, you’re okay with it?
THE PRESIDENT: No, not whatever Congress sends me. They’re going to have to send me something that’s sensible. And we shouldn’t be doing this –
Q — (inaudible) –
THE PRESIDENT: — and we shouldn’t be doing this on a one to three-month timeframe. Why would we do that? This is the United States of America, Major. What, we can’t manage our affairs in such a way that we pay our bills and we provide some certainty in terms of how we pay our bills?
Look, I don’t think anybody would consider my position unreasonable here. I have –
Q But why does it presuppose the need to negotiate and talk about this on a daily basis? Because if default is the biggest threat to the economy, why not talk about it –
THE PRESIDENT: Major, I am happy to have a conversation about how we reduce our deficits. I’m not going to have a monthly or every-three-months conversation about whether or not we pay our bills. Because that in and of itself does severe damage. Even the threat of default hurts our economy. It’s hurting our economy as we speak. We shouldn’t be having that debate.
If we want to have a conversation about how to reduce our deficit, let’s have that. We’ve been having that for the last two years. We just had an entire campaign about it. And by the way, the American people agreed with me that we should reduce our deficits in a balanced way that also takes into account the need for us to grow this economy and put people back to work.
And despite that conversation, and despite the election results, the position that’s been taken on the part of some House Republicans is that, “no, we’ve got to do it our way, and if we don’t, we simply won’t pay America’s bills.” Well, that can’t be a position that is sustainable over time. It’s not one that’s good for the economy now. It’s certainly not going to be the kind of precedent that I want to establish not just for my presidency, but for future Presidents, even if it was on the other side.
Democrats don’t like voting for the debt ceiling when a Republican is President, and yet you — but you never saw a situation in which Democrats suggested somehow that we would go ahead and default if we didn’t get 100 percent of our way. That’s just not how it’s supposed to work.
Q Thank you, Mr. President. I just want to come back to the debt ceiling, because in the summer of 2011, you said that you wouldn’t negotiate on the debt ceiling, and you did. Last year, you said that you wouldn’t extend any of the Bush tax cuts for the wealthy, and you did. So as you say now that you’re not going to negotiate on the debt ceiling this year, why should House Republicans take that seriously and think that if we get to the one-minute-to-midnight scenario, that you’re not going to back down?
THE PRESIDENT: Well, first of all, Julianna, let’s take the example of this year and the fiscal cliff. I didn’t say that I would not have any conversations at all about extending the Bush tax cuts. What I said was we weren’t going to extend Bush tax cuts for the wealthy — and we didn’t. Now, you can argue that during the campaign I said — I set the criteria for wealthy at $250,000 and we ended up being at $400,000. But the fact of the matter is millionaires, billionaires are paying significantly more in taxes, just as I said. So from the start, my concern was making sure that we had a tax code that was fair and that protected the middle class, and my biggest priority was making sure that middle-class taxes did not go up.
The difference between this year and 2011 is the fact that we’ve already made $1.2 trillion in cuts. And at the time, I indicated that there were cuts that we could sensibly make that would not damage our economy, would not impede growth. I said at the time I think we should pair it up with revenue in order to have an overall balanced package. But my own budget reflected cuts in discretionary spending. My own budget reflected the cuts that needed to be made, and we’ve made those cuts.
Now, the challenge going forward is that we’ve now made some big cuts, and if we’re going to do further deficit reduction, the only way to do it is in a balanced and responsible way.
The alternative is for us to go ahead and cut commitments that we’ve made on things like Medicare, or Social Security, or Medicaid, and for us to fundamentally change commitments that we’ve made to make sure that seniors don’t go into poverty, or that children who are disabled are properly cared for. For us to change that contract we’ve made with the American people rather than look at options like closing loopholes for corporations that they don’t need, that points to a long-term trend in which we have fundamentally, I think, undermined what people expect out of this government — which is that parties sit down, they negotiate, they compromise, but they also reflect the will of the American people; that you don’t have one narrow faction that is able to simply dictate 100 percent of what they want all the time or otherwise threaten that we destroy the American economy.
Another way of putting it is we’ve got to break the habit of negotiating through crisis over and over again. And now is as good of a time as any, at the start of my second term, because if we continue down this path, then there’s really no stopping the principle. I mean, literally — even in divided government, even where we’ve got a Democratic President and a Democratic Senate, that a small group in the House of Representatives could simply say every two months, every three months, every six months, every year, we are going to more and more change the economy in ways that we prefer, despite strong objections of Americans all across the country, or otherwise we’re going to have America not pay its bills. And that is no way for us to do business.
And by the way, I would make the same argument if it was a Republican President and a Republican Senate and you had a handful of Democrats who were suggesting that we are going to hijack the process and make sure that either we get our way 100 percent of the time, or otherwise we are going to default on America’s obligations.
Q (Inaudible) — line in the sand negotiating, how is that (inaudible) to the economy?
THE PRESIDENT: No, no, look, what I’ve said is that I’m happy to have a conversation about deficit reduction –
Q So you technically are willing to negotiate?
THE PRESIDENT: No, Julianna, look, this is pretty straightforward. Either Congress pays its bills or it doesn’t. Now, if — and they want to keep this responsibility; if John Boehner and Mitch McConnell think that they can come up with a plan that somehow meets their criteria that they’ve set for why they will — when they will raise the debt ceiling, they’re free to go ahead and try. But the proposals that they’ve put forward in order to accomplish that — only by cutting spending — means cuts to things like Medicare and education that the American people profoundly reject.
Now, if they think that they can get that through Congress, then they’re free to try. But I think that a better way of doing this is go ahead and say, we’re going to pay our bills. The question now is how do we actually get our deficit in a manageable, sustainable way? And that’s a conversation I’m happy to have.
All right. Matt Spetalnick.
Q Thank you, sir. You’ve spoken extensively about the debt ceiling debate, but some Republicans have further said that they’re willing to allow a government shutdown to take place rather than put off deep spending cuts. Are you prepared to allow the government to grind to a halt if you disagree with the spending cut proposals they put forth? And who do you think the American people would blame if that came to pass?
THE PRESIDENT: Well, ultimately, Congress makes the decisions about whether or not we spend money and whether or not we keep this government open. And if the Republicans in Congress have made a decision that they want to shut down the government in order to get their way then they have the votes at least in the House of Representatives, probably, to do that.
I think that would be a mistake. I think it would be profoundly damaging to our economy. I think it would actually add to our deficit because it will impede growth. I think it’s shortsighted. But they’re elected representatives, and folks put them into those positions and they’re going to have to make a decision about that. And I don’t — I suspect that the American people would blame all of Washington for not being able to get its act together.
But the larger issue here has to do with what is it that we’re trying to accomplish. Are we trying to reduce the deficit? Because if we’re trying to reduce the deficit, then we can shape a bipartisan plan to reduce the deficit. I mean, is that really our objective? Our concern is that we’re spending more than we take in, and if that’s the case, then there’s a way of balancing that out so that we take in more money in increasing revenue and we reduce spending. And there’s a recipe for getting that done.
And in the conversations that I had with Speaker Boehner before the end of the year, we came pretty close — a few hundred billion dollars separating us when stretched over a 10-year period, that’s not a lot.
But it seems as if what’s motivating and propelling at this point some of the House Republicans is more than simply deficit reduction. They have a particular vision about what government should and should not do. So they are suspicious about government’s commitments, for example, to make sure that seniors have decent health care as they get older. They have suspicions about Social Security. They have suspicions about whether government should make sure that kids in poverty are getting enough to eat, or whether we should be spending money on medical research. So they’ve got a particular view of what government should do and should be.
And that view was rejected by the American people when it was debated during the presidential campaign. I think every poll that’s out there indicates that the American people actually think our commitment to Medicare or to education is really important, and that’s something that we should look at as a last resort in terms of reducing the deficit, and it makes a lot more sense for us to close, for example, corporate loopholes before we go to putting a bigger burden on students or seniors.
But if the House Republicans disagree with that and they want to shut down the government to see if they can get their way on it, that’s their prerogative. That’s how the system is set up. It will damage our economy.
The government is a big part of this economy, and it’s interesting that a lot of times you have people who recognize that when it comes to defense spending — some of the same folks who say we’ve got to cut spending, or complain that government jobs don’t do anything, when it comes to that defense contractor in their district, they think, wow, this is a pretty important part of the economy in my district and we shouldn’t stop spending on that. Let’s just make sure we’re not spending on those other folks.
Q — find agreement with Republicans on this and –
THE PRESIDENT: Look, my hope is, is that common sense prevails. That’s always my preference. And I think that would the preference of the American people, and that’s what would be good for the economy.
So let me just repeat: If the issue is deficit reduction, getting our deficits sustainable over time, getting our debt in a sustainable place, then Democrats and Republicans in Congress will have a partner with me.
We can achieve that, and we can achieve it fairly quickly. I mean, we know what the numbers are. We know what needs to be done. We know what a balanced approach would take. We’ve already done probably more than half of the deficit reduction we need to stabilize the debt and the deficit. There’s probably been more pain and drama in getting there than we needed. And so finishing the job shouldn’t be that difficult — if everybody comes to the conversation with an open mind, and if we recognize that there are some things, like not paying our bills, that should be out of bounds.
- WhiteHouse.gov: News conference by President Barack Obama on Jan. 14, 2013
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